Pretty much everyone agrees that we need to improve the quality of healthcare delivered to patients in the US. We’ve all heard the frightening statistics from the Institute of Medicine about medical error rates – that as many as 98,000 patients die each year as a result of them – and we also know that the US spends about 33% more than most industrialized country on healthcare, without substantial improvements in outcomes.

However, a large number of quality improvement initiatives rely on additional rules, regulations, and penalties to inspire change (for example, decreasing Medicare payments to hospitals with higher readmission rates, and decreasing provider compensation based on quality indicators). Not only am I skeptical about this stick vs. carrot strategy, but I think it will further demoralize providers, pit key stakeholders against one another, and cause people to spend their energy figuring out how to game the system than do the right thing for patients.

There is a carrot approach that could theoretically result in a $757 billion savings/year that has not been fully explored – and I suggest that we take a look at it before we “release the hounds” on hospitals and providers in an attempt to improve healthcare quality.

I attended the Senate Finance Committee’s hearing on budget options for health care reform on February 25th. One of the potential areas of substantial cost savings identified by the Congressional Budget Office (CBO) is non evidence-based variations in practice patterns. In fact, at the recent Medicare Policy Summit, CBO staff identified this problem as one of the top three causes of rising healthcare costs. Just take a look at this map of variations of healthcare spending to get a feel for the local practice cultures that influence treatment choices and prices for those treatments. There seems to be no organizing principle at all.

Senator Baucus (Chairman of the Senate Finance Committee) appeared genuinely distressed about this situation and was unclear about the best way to incentivize (or penalize) doctors to make their care decisions more uniformly evidence-based. In my opinion, a “top down” approach will likely be received with mistrust and disgruntlement on the part of physicians. What the Senator needs to know is that there is a bottom up approach already in place that could provide a real win-win here.(more…)